It is not difficult to change for a day. But it can seem almost impossible to change for a year — or a week. Though 2009 is only eight days old, I suspect that many folks are already struggling with their New Year's resolutions.

This problem is the driving force behind StickK.com. StickK helps users to set — and stick to — “commitment contracts”. Here's how it works:

After signing up with stickK, you will be able to create a commitment contract obliging you to achieve a specific goal within a particular time-frame. By creating a contract to meet one of your goals, you're actually testing yourself and saying, “Hey, I can do this”. Not only are you challenging yourself, you're also putting your reputation at stake.

You can even make a financial contract to give yourself an added incentive to reach your goals. If you succeed, you don't pay anything. If you don't make it, you have the option of forfeiting your money to a person of your choice, a charity, an anti-charity, or even that neighbor who keeps stealing your newspaper.

I originally had to lose a pound a week (or else lose money). Then I had to keep my weight below my contractual target of 185 pounds. In contrast to Weight Watchers, which can cost about $500 a year and helps you lose on average 6 or 7 lbs (about 3 percent of your initial weight), I put $500 at risk each week. In equilibrium, I've lost 25 pounds (12 percent of my pre-diet body weight) and so far it has cost me nothing.

There's no requirement to wager money, but doing so provides extra motivation. It gives your goal extra stickiness. StickK features four prominent “communities” devoted to the following commitment contracts:

Stop smoking

Lose weight

Vote

Exercise fitness

You're not limited to those four categories, though. You can draft a commitment contract for any goal, including those related to personal finance. The site's users have made goals to avoid shopping, to stop gambling, to pay off credit cards, to live a junk-free life, and “to save a little every week“.

StickK is free to use, and is available to people outside the United States. For more information, check out the FAQ.

In 2006, J.D. founded Get Rich Slowly to document his quest to get out of debt. Over time, he learned how to save and how to invest. Today, he's managed to reach early retirement! He wants to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you reach your goals.

Like What You've Read?

Join 23,211 subscribers who receive the weekly GRS Insider email newsletterfeaturing the best of the blog – and beyond. No spam. (Never.) Unsubscribe at any time.

There are 21 reader responses to "Commitment Contracts and StickK.com".

Lukesays

You could also try out Blotmarks (www.blotmarks.com) which is a free goal daily goal tracking service. It’s geared toward accountability, so you can share your goals with others and hold each other accountable.

I do like the concept of Stickk though. It lets you put your money where your mouth is. Blotmarks is simpler, but if you have self discipline, it can be just as effective.

Multiple studies show, for whatever reason, that people are much more likely to do things if they write it down. Somehow it makes it concrete and more difficult not to do. I will check this site out. Thanks!

I have a “homegrown” version of this, but I utilize positive rather than negative reinforcement. Our finances are in a good enough place that I give myself a discretionary “allowance” every week. This is money that my wife isn’t allowed to give me a hard time on how I spend (it’s a pittance compared to my income).

I also have twin fitness and financial goals of riding my bike to get in shape and, ultimately, sell our second car (I work < 5 miles from home so it’s imminently rideable).

Anyhow, in order to create a positive feedback loop my allowance is now a “per mile” allowance based on what trips I replace driving my chevy blazer with riding my bike. The per mile value is about the 1/2 the real cost (gas, insurance, taxes, maintenance, etc) of owning my blazer.

One of the aspects of StickK, I think, may actually counteract some of that behavioral incentive. When you put money on the line for a contract at the site, all the money you commit is paid up front. If you fulfill the contract, you get the money back.

Behavioral finance studies have shown that people are much more averse to loss than they are attracted to gains. Meaning, most people will react far differently (more conservatively) in a situation in which they are gambling with money they already have compared to a situation in which they are given new money with which to gamble and then get to keep whatever they don’t lose. So by paying the money upfront to StickK, you may start thinking of the money as already gone, which will give you less of an incentive to get it back.

I’ve done StickK.com. You don’t pay the money up front, you just give them your credit card number. The money is not deducted unless you fail at your goal. So to me that still counts as not losing the money until the end.

I make a commitment contract on StickK on March 9th to lose 1.5 pounds per week , with a goal weight of 160 pounds. I’ve found it very motivating! I have lost 5.5 pounds so far and feel much less tempted to eat junk than before I made the committment. I bet 15.00 per week on myself.

I used stick to give up soda for a few months, too. It worked great. Knowing not only that I would lose money, but that it would go to a political cause that I opposed, was a very strong incentive. I met my goal and now I drink soda again but much less often since I broke the cycle. Part of the key to using StikK is finding a helpful referee – I had my coworker watch me because I always used to drink soda at my desk at work.

The problem with a site like this is that I don’t care if internet people know that I’ve failed to meet my goals, and they don’t care if I succeed at them or not. If I let down my wife? That’s a problem. If I let down random people from the internet that I’ve never met? Eh, I don’t really care, and neither do they.

I also have a feeling (but haven’t tried the site, so I can’t say for sure), that it’s going to be a lot like a message board post that asks a question like “how long does it take you to get to work in the morning?”

It’s a really easy question to answer, and people like to feel like they’re contributing, so everyone posts, “it takes me 25 minutes to get drive to work” (or whatever), and soon enough, there are 450 responses. But, when person number 451 comes and finds the thread, he doesn’t read through the existing responses and see if he has anything interesting to add, because it’s not a discussion. He just adds, “it takes me 10 minutes”, to the bottom, and doesn’t look at all the previous posts, because they’re not really very interesting on their own.

This site sounds basically the same. It’s a big long list of goals, each of which is very interesting to the person who posted it, but not particularly interesting to anyone else. Be honest, when you go to the site and it says “5243 people have posted goals!” Are you going to read them? Maybe the ones on the first page. Then you’ll see that a whole lot of people want to lose weight, or get out of debt, and you’ll get bored, and you’ll add your own goal to the end of the list, where no one will read it. I’ve seen it happen a million times on other sites, and I’ve even contributed to it plenty of times.

The fact that no one reads about your goal is exceptionally important on this site, because you’re relying on the community to chastise you if you fail. But, if you haven’t actually talked to anyone on the site about the goal, and you don’t feel like you’ll be letting down your friends, then you’re not getting much extra motivation to stick to your plans. If you ultimately do fail, and no one says, “Hey man, you let us all down!” all it does is reinforces the notion that no one on the website actually cared if you succeeded at all.

Yeah, it’s a fairly negative view, but I’ve participated in enough online communities to know that most people only want to read something that you’ve written if they think it might be funny or interesting, they think it will help them solve a problem they’re having, or it gives them a chance to feel helpful by giving you information that they have and you need. “I want to lose weight” doesn’t fit into any of these categories, so I really don’t see many people wanting to read about it.

When I saw the “Vote” StickK option, I was at first ready to scoff, but then I realized how many school board, town government, and county legislative/executive elections that don’t occur in November, around the reminder of a more prominent DC-based race, can slide by without folks noticing. I’m guilty myself of forgetting some of the local contests. There’s no such thing as an insignificant vote or an inessential election, so I’m glad they feature this one.

I’m a little distressed by the idea of people using this to measure results instead of inputs. You cannot, no matter what people say, directly control the number of pounds you lose in a week. You can control your own behaviors. To wager $500 on the former, even for a good cause, seems financially foolish because what happens if you lose two pounds one week, and half a pound the next? Net result loss of one pound per week, but the second week gets painted as a failure *and* costs you money.

Stick to your own performance, IMO. If you set a goal like “lose one pound a week” or “get promoted by the end of the year”, you’re really gambling. Measure instead the things you can control: “consume an average of 1800 calories a day or less each week”, “exercise half an hour a day”, “get a new certification by the end of the year”, “increase my workplace productivity by 10%”–you know if you can really do all those things, and you’re the one who controls the result. You can’t control if your boss promotes you in the end, but you can do everything you can to deserve a promotion. You can’t control the exact timetable and quantity of fat loss, but you can adopt healthy behaviors. If you’re going to be putting cash on the line, it’s an important distinction. And especially important when evidently the site will not allow you to do a weight goal anything but weekly, thus preventing long-term averaging.

But I can see the benefit of the service in general, I just think that particular aspect is problematic.

I’ve never used online contracts, but when I found myself strugging to stay on my eating plan, I would make a 3-week contract with myself. I set out the steps that I would do for just three weeks to follow my eating and exercise plan. Then I’d print the contract, sign it, and put it on my bulletin board. In essence I made a commitment to myself, and I don’t like to let myself down. Most of the time when I stuck with it for three weeks, I found I could then go longer periods. It was successful for me–I lost 100 lbs. and have maintained it (harder than losing!) for two years.

I’m a big fan of making resolutions throughout the year, not just on New Year’s eve.

So much so that myself and two friends created http://www.pledgehammer.com on our free time. It provides an easy way to write your resolutions down and share with whoever you want to share them with. It also adds a financial incentive – if you don’t keep your resolution it asks you to donate money to charity. Only charity, there are no options to give money to a friend or ‘enemy’. So whether you keep your resolution or not, either way the world will be a little bit better.

Pledgehammer is definitely not a hardcore goal-reaching tool such as Stickk or myGoals. It’s rather a very easy and sharable way to write down your goals, with a charitable touch. Having your goals written down, with a deadline and publicly seen for all your friends is just incredibly powerful.

I remember hearing about this site a while ago, probably through the Freakonomics blog post you mention. I certainly hope the site is able to help people stick(K?) to their resolutions (or goals). I’m very interested to see how it works out for people!

I just signed up and I can tell just from the way I feel about it that it’s going to be incredibly effective for me. I set a goal of exercising 5 days per week. I have had a weight loss goal for months that I’ve told my friends about, I track measurements, I’m serious about, I have a plan – everything you’re supposed to do and it’s been effective, but not effective as it could be. It’s winter and I’ve been hesitating about exercising because it’s cold and the alternative I’d like to use, a yoga studio two blocks from my house, is $20/class. I picked $50/week on Stickk off the cuff because it’s big enough that I’ll be pissed if I lose it but it won’t make it impossible for me to pay my mortgage, etc. A monetary commitment totally changes the economics of my goal. Now if I have to go to yoga one day because it’s too cold or too dark outside when I have the time to exercise, it will still be cheaper than missing my target of exercising 5 days per week. It’s exactly the kind of mental rearranging I couldn’t do on my own because it irks me this studio is so expensive, even if ultimately it’s worth $20 for the convenience, exercise and pleasure I get from going there.

We just launched an alternative to StickK: http://goalfinch.com. Goalfinch focuses on making it as easy as possible to set up a commitment contract — if you have a Facebook account, you’re already set to go. Money gets contributed up front, and you have the choice of going “all or nothing” (all your money gets donated to charity if any of your friends fail to verify the goal) or “proportional” – you get back the same proportion of your money as the proportion of your friends who confirmed the goal. This space is getting really interesting with lots of great options out there!

Your email address will not be published. Required fields are marked *

Comment

Name *

Email *

My name is J.D. Roth. I started Get Rich Slowly in 2006 to document my personal journey as I dug out of debt. Then I shared while I learned to save and invest. Twelve years later, I've managed to reach early retirement! I'm here to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you get rich slowly. Read more.

General Disclaimer: Get Rich Slowly is an independent website managed by J.D. Roth, who is not a trained financial expert. His knowledge comes from the school of hard knocks. He does his best to provide accurate, useful info, but makes no guarantee that all readers will achieve the same level of success. If you have questions, consult a trained professional.

Advertising Disclosure: Some offers on this page may promote affiliates, which means GRS earns a commission if you purchase products or services through the links provided. All opinions expressed here are the author's and not of any other entity. The content at Get Rich Slowly has not been reviewed, approved, or endorsed by any entity mentioned at the site. For additional information, please review our full advertising disclosure.